Special Alert: Booking a win as we trim back our call option position in Applied Materials
KEY POINTS FROM THIS ALERT:
- We are issuing a Sell on the Applied Materials (AMAT) January 2018 $55 calls (AMAT180119C00055000) that we added to the Tematica Options+ Select List on Dec. 14 at 0.60. With last night’s market close, that slug of AMAT calls closed at 1.03, more than 70% higher than our buy-in last week.
- Given the favorable fundamental drivers behind Applied Materials, we will continue to hold the Applied Materials (AMAT) January 2018 $55 calls (AMAT180119C00055000) that we added to our holdings on Dec. 7th at 1.13 per share.
As market enthusiasm for tax reform has swelled over the last several days, we’ve seen the stock market climb to new highs and this has pushed all of our call positions higher. The increased outlook for reform passage came late last week on the news that recent holdouts Republican Senators Marco Rubio and Bob Corker will indeed support the tax bill following recent tweaks. Lawmakers are expected to vote on the bill this week, and we would say the market expects the bill to pass. That of course, also means that if the bill doesn’t pass we will more than likely see stocks move lower. We’ll continue to see how things develop this week, but candidly we are rather in the camp that expects a positive vote.
Since bottoming out a week ago near $50.50, Applied Materials shares have climbed 5.7%, but we’ve seen a far more pronounced move – more than 70% — in the Applied Materials (AMAT) January 2018 $55 calls (AMAT180119C00055000) that we added to the Tematica Options+ Select List on Dec. 14 at 0.60. Quite a move in just a few days, and so we as prudent investors will book as a win, and are selling those calls at market open.
Because we continue to see a bright outlook for Applied into 2018 due to ramping demand for its semiconductor capital and display equipment, we will continue to hold the other slug of Applied Materials (AMAT) January 2018 $55 calls (AMAT180119C00055000) that we added to our holdings on Dec. 7th at 1.13. As we soon exit 2017, the next known catalyst for AMAT shares as well as these January 2018 calls will be the 2018 Consumer Electronics Show that spans Jan. 9 -12.
